Boeing awarded $10.8M contract for DVR/APKWS installation, a sole-source procurement

Contract Overview

Contract Amount: $10,778,820 ($10.8M)

Contractor: THE Boeing Company

Awarding Agency: Department of Defense

Start Date: 2019-11-22

End Date: 2023-06-30

Contract Duration: 1,316 days

Daily Burn Rate: $8.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DVR/APKWS INSTALLATION

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $10.8 million to THE BOEING COMPANY for work described as: DVR/APKWS INSTALLATION Key points: 1. Contract awarded to a single vendor suggests potential lack of competitive pricing. 2. Long contract duration (over 3 years) may indicate complex integration or ongoing support needs. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. This procurement falls under aircraft parts manufacturing, a sector with established players. 5. Sole-source awards warrant scrutiny to ensure fair market value was obtained.

Value Assessment

Rating: questionable

Without competitive bids, it is difficult to benchmark the value for money on this $10.8 million contract. The sole-source nature raises concerns about whether the government secured the best possible price. Comparisons to similar DVR/APKWS installation contracts are challenging due to the lack of publicly available data on sole-source procurements. The fixed-price structure, however, does provide cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Boeing Company, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they limit price discovery and potentially lead to higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through open competition, potentially leading to a higher overall expenditure for this requirement.

Public Impact

The primary beneficiary is the Department of the Army, receiving installation services for DVR/APKWS. This contract supports the operational readiness and technological advancement of Army aviation assets. The contract's performance is located in Arizona, potentially impacting the local workforce and economy in that state. The services provided are critical for modernizing aircraft systems, enhancing defense capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially inflates costs.
Lack of transparency in pricing due to non-competitive nature.
Long contract duration could mask inefficiencies or scope creep without proper oversight.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Award to a known entity (Boeing) may indicate reliance on specialized expertise.
Contract supports critical defense systems, contributing to national security.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a segment of the broader aerospace and defense industry. This industry is characterized by high barriers to entry, significant R&D investment, and a concentration of large, established players like Boeing. Spending in this sector is often driven by defense procurement needs, with contracts ranging from component manufacturing to complex system integration. Benchmarking is difficult without more specific details on the DVR/APKWS system and its integration complexity.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like Boeing suggests that subcontracting opportunities for small businesses may exist, but these are not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on Boeing's subcontracting strategy and the availability of qualified small businesses for specific components or services related to the DVR/APKWS installation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. The long duration necessitates robust performance monitoring to ensure compliance and value.

Related Government Programs

Aircraft Modification and Repair Services
Avionics Systems Procurement
Defense Logistics Agency (DLA) Contracts
Air Force Materiel Command (AFMC) Procurements
Naval Air Systems Command (NAVAIR) Contracts

Risk Flags

Sole-source award raises concerns about fair pricing.
Lack of competition limits transparency and potential cost savings.
Long contract duration requires diligent oversight to prevent scope creep and ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.8 million to THE BOEING COMPANY. DVR/APKWS INSTALLATION

Who is the contractor on this award?

The obligated recipient is THE BOEING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $10.8 million.

What is the period of performance?

Start: 2019-11-22. End: 2023-06-30.

What is the specific function and technical complexity of the DVR/APKWS system being installed?

The DVR (Digital Video Recorder) system is used for recording flight data and video for post-mission analysis, training, and incident investigation. The APKWS (Advanced Precision Kill Weapon System) is a laser-guided rocket system that converts unguided 2.75-inch rockets into "smart" munitions, providing a low-cost guided weapon capability. The installation of these systems involves integrating complex electronic and mechanical components into aircraft platforms, requiring specialized knowledge of avionics, power systems, and weapon interfaces. The technical complexity can vary significantly depending on the specific aircraft type and the extent of modifications required.

Why was this contract awarded on a sole-source basis to The Boeing Company?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For The Boeing Company, this could be due to factors such as proprietary technology, unique manufacturing capabilities, existing integration with Boeing-produced aircraft platforms, or specific sustainment and support requirements that only Boeing can fulfill. The government would have had to document the justification for other than full and open competition, likely citing reasons like specialized expertise, compatibility with existing systems, or a lack of viable alternatives in the market for this specific application.

What is the historical spending pattern for DVR/APKWS installations by the Department of the Army?

Historical spending data for DVR/APKWS installations by the Department of the Army is not readily available in a consolidated format within the provided data. However, the award to Boeing for $10.8 million suggests a significant investment in this capability. The Army has been a proponent of precision-guided munitions and advanced avionics for its helicopter and fixed-wing fleets. Previous procurements may have involved different contractors, different contract types, or been part of larger platform-specific upgrade packages. Analyzing historical spending would require delving into specific contract databases and program budgets related to Army aviation modernization efforts.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risk associated with a sole-source contract of this magnitude ($10.8 million) and duration (over 3 years) is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may pay more than it would in a fully competed scenario. Other risks include contractor complacency, potential for scope creep if not tightly managed, and a reduced incentive for the contractor to innovate or improve efficiency. Furthermore, if the sole-source justification was weak, it could indicate a failure in the procurement process to identify potential competition.

How does the fixed-price contract type mitigate or introduce risk for the government?

A Firm Fixed Price (FFP) contract type generally shifts the majority of the cost risk from the government to the contractor. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This provides the government with cost certainty and predictability, which is a significant benefit. However, it can also incentivize the contractor to cut corners on quality or performance if not adequately monitored, or to seek change orders if unforeseen issues arise. For the government, the risk is primarily in ensuring the scope is well-defined to avoid costly modifications and that performance standards are met.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ18R0078

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5000 E MCDOWELL RD, MESA, AZ, 85215

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,778,820

Exercised Options: $10,778,820

Current Obligation: $10,778,820

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $2,188,334

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline